Lack of funds closing tourism agency

San Diego’s tourism agency says it will shut its doors Monday because the money it needs to pay its employees has still not been released by the city.

Mayor Bob Filner acknowledged in an interview Wednesday night that he is withholding millions of dollars in tourism marketing revenue until he is assured that a share of the money will go to help underwrite the centennial celebration of the 1915 exposition in Balboa Park.

Although the city’s hoteliers and Filner last month ended their months-long feud over how to spend money generated by a 2 percent hotel room levy, Filner claims that San Diego’s Tourism Marketing District is not holding up its end of the deal and worries that the centennial effort will be shortchanged. The hotelier-run district counters that it does plan to honor its commitment but anticipates lower revenues than originally forecast.

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“We agreed that the Balboa Park Centennial would get 5 percent of the funds they get (through June),” Filner said. “They told the Centennial people they’re probably not going to get any money because they don’t have any money. I want them to give Balboa Park money off the top, not the bottom. They don’t want to give Balboa Park money so they shouldn’t get their money until they give it to Balboa Park.”

Unless the frozen funds are released soon, all marketing efforts will be suspended come Monday, said Tourism Authority CEO Joe Terzi, whose agency relies on the marketing district revenues for 80 percent of its funding. The district estimates that the 2 percent room surcharge will yield $11 million by the end of June.

That money, collected by the city, is supposed to be disbursed to the TMD under an operating agreement ratified by the City Council and already signed by the mayor.

The Tourism Authority’s move to shut down, which could be short-lived if centennial funding is approved on Friday, comes as San Diego’s tourism industry prepares for the crucial summer season. Unaffected by the closure is the Tourism Authority’s sales and marketing efforts for the Convention Center. The 12 staff members tasked with securing long-term bookings are paid through a contract with the Convention Center Corp.

“We don’t have any money, and we can’t continue to operate,” Terzi said. “We’re waiting to see if the TMD can get the issue resolved with the mayor but right now, effective Monday, we’re suspending sales and marketing operations. Do we want to do this? No. I have 85 employees I just told they can’t come to work Monday. It’s not a joke. I made my payroll (previously) by borrowing money.”

The tourism agency earlier this year issued layoff notices to its employees, scheduling terminations for mid-May when it appeared Filner wouldn’t release the marketing funds. It didn’t expect layoffs would be necessary after the mayor signed the tourism agreement last month.

Also shutting down Monday is the downtown visitors center, where tickets to local attractions can be purchased, said Tourism Authority spokesman Darren Pudgil.

In a statement released by the marketing district, board chairman Terry Brown countered Filner’s claims about the centennial funding.

“The SDTMD board at our meeting last week committed to funding the Centennial in exact conformance with the amended operating agreement,” read the statement. “Unfortunately, the amount of money available for disbursement was less than the mayor wanted and he indicated that he would continue to withhold the tourism funding. Withholding the funding not only hurts the region’s economy and tourism jobs, it also prevents funding of the centennial. Given the situation, the TMD board will consider its options at the Friday board meeting.”

At that meeting, board members will be focusing primarily on allocating future funding for the coming fiscal year, which begins July 1. The Tourism Authority will be making a formal funding request, as will Balboa Park Celebration, Inc., the group overseeing planning for the centennial celebration. It’s very possible that once the board acts on the Balboa Park funding request, Filner could relent and the money could be released to the marketing district, although the mayor said it could still take weeks to cut a check.

He told hoteliers Thursday that he’d had enough of their “whining and complaining.”

Of the planned shutdown of the Tourism Authority, he said, “This idle and baseless threat is beneath them and I urge them to grow up and do business the right way. The City of San Diego will not be held hostage by such antics.”

One of the terms of the district’s operating agreement is a commitment to consider setting aside 5 percent of all revenues collected during the first six months of this year for the centennial planning effort. In addition, over the next two years, the planning committee could apply for up to $6 million, or 10 percent of marketing revenues. While the money is not guaranteed, the language in the pact states that “approval cannot be unreasonably denied.”

Although it’s unlikely that the marketing district board would deny funding for the centennial, it is likely that the total dollar amount that’s ultimately allocated could be much less than hoped for because revenues from the hotel room charge are forecast to be lower than originally anticipated.

Balboa Park Celebration has opted to not weigh in on the funding dispute, issuing a statement that feedback on its application for funding has been “excellent.”

“We do not see ourselves as competitors with the San Diego Tourism Authority, but as working toward complementary goals,” said Gerry Braun, spokesman for Balboa Park Celebration.

The latest falling out between Filner and the city’s hoteliers follows a tumultuous, months-long period during which the marketing district took Filner to court to force him to sign the marketing agreement. The council also intervened, passing a resolution ordering Filner to sign the pact. He ultimately did after winning some concessions, including language protecting the city’s general fund in the event that lawsuits challenging the hotel room levy are successful.

If the current dispute is not resolved soon, the council could weigh in yet again,” said City Councilman Kevin Faulconer. “This is complete dysfunction, it’s no way to run a city,” he said. “This should have been resolved weeks ago. The mayor signed the contract, the contract terms are clear and this is putting San Diego jobs at risk.”